I am a fourth-year econ. Ph.D. candidate at the French National Institute for Research on Agriculture, Food, and the Environment (INRAE), under the direction of Olivier Allais (INRAE) and Céline Bonnet (TSE). My main interests lie in the fields of industrial organization and policy evaluation.
Policymakers have increasingly implemented nutritional taxes to influence con- sumer behavior toward healthier diets. While theoretical and empirical litera- ture suggests that taxes should be proportional to the harm caused, most taxes implemented to date, including sugar taxes, feature tiered rather than linear de- signs. This discrepancy between theory and practice raises the central question: can tiered sugar taxes, under imperfect competition and market power, be welfare- optimal, and if so, how should their structure be designed? In this paper, we eval- uate the economic performance of tiered sugar tax designs compared to the theo- retically optimal linear tax. Using a welfare maximization framework, we account for externalities from excess sugar consumption, heterogeneous consumption pat- terns, and firms’ strategic pricing behavior. Our findings reveal that tiered tax de- signs, when incorporating strategic responses from firms, can lead to significantly greater welfare improvements than linear taxation or the implemented Soft Drinks Industry Levy in the UK. Specifically, the optimal design features higher taxes on high-sugar products, prompting firms to reduce prices on lower-sugar alternatives. This adjustment not only enhances public health outcomes but also increases con- sumer surplus and preserves firm profitability. These results suggest that tiered sugar taxes can serve as welfare-enhancing policy tools when designed to reflect both consumer heterogeneity and market competition.
Many countries have implemented fiscal policies to promote healthier diets. However, policymakers still have little guidance on how to design taxes. The main objective of this paper is to investigate the impact of the tax threshold in a sugar-based tax on welfare when firms engage or not in product reformulation. We develop a structural econometric model that incorporates consumers’ substitution patterns and firms’ price competition. Using household scanner data from the French dessert market, we show that the choice of the tax threshold strongly affects the share of taxed and reformulated products, the magnitude of the price increase, and welfare effects: the lower the tax threshold, the lower sugar consumption reduction, but the greater the reduction in consumer surplus and firms profit. Moreover, a tiered sugar-based tax reduces more sugar consumption when firms reformulate and allows for better targeting of the at-risk population.
Obesity represents a growing global challenge, with significant health and eco- nomic consequences. One of the main drivers of this epidemic is excessive sugar intake. Public policies such as education campaigns and product labelling have shown limited effectiveness, leading to increasing interest in fiscal measures like sugar taxes. While taxes on sugar-sweetened beverages have demonstrated reductions in consumption, evidence remains limited regarding their extension to other high-sugar products. This study assesses the potential impacts of sugar taxation policies in France, the United Kingdom, and Spain on three key product categories that contribute substantially to sugar intake: non-alcoholic beverages, biscuits, and dairy desserts. Using nationally representative scanner data and a structural econometric model, we estimate demand, model firm pricing behavior under oligopolistic competition, and simulate the effects of a two-tiered sugar-based tax. Results indicate that firms generally over-shift the tax to prices, leading to significant reductions in purchases and sugar intake, with the largest impacts observed in non-alcoholic beverages and French dairy desserts. The tax is particularly effective among households with overweight or obese adults. Although consumer surplus and firm profits decline, these losses are outweighed by fiscal revenues and reductions in the social costs of excessive sugar intake. Overall, our findings suggest that extending sugar taxes to other food and drink products can reduce sugar consumption and generate positive welfare effects. We then provide valuable evidence for policymakers considering broader fiscal measures to address diet-related health challenges.
This paper investigates the implementation of the Soft Drinks Industry Levy (SDIL) in the United Kingdom, leveraging panel data from 2015 to 2018 to assess the policy's impacts. Introduced in April 2018, the SDIL is a targeted fiscal intervention designed to reduce sugar consumption through a price-based mechanism. Under the policy, beverages with sugar content exceeding 5g per 100ml are subject to an 18p per liter levy, with an additional 8p for products exceeding 8g, leaving part of the supply chain untouched by regulation. While prior research has examined the immediate effects of the SDIL on consumption patterns, pricing strategies, and product reformulation—highlighting significant reformulation efforts in the pre-implementation phase—this study advances the literature by adopting a structural approach. By integrating consumer panel data across pre- and post-implementation phases, this analysis disentangles the causal effects of the levy from broader market trends. Furthermore, the structural framework enables counterfactual simulations, allowing us to assess the policy’s potential impacts in a pre-policy environment and to explore optimal taxation designs.
We develop a structural econometric demand and supply model that allows integrating price and quality reactions to tax policies. Using the Kantar WorldPanel dataset combined with nutritional information from the Oqali dataset, we study a potential implementation of sugar-based taxation in the French dessert market. The number of countries that have implemented a tax on unhealthy foods is growing rapidly. Most taxes target sugary beverages but, in some cases, they also target a wide range of unhealthy foods and beverages. The decrease of consumption is generally considered to be a consequence of the price increase of taxed products. However, several studies have shown that the price transmission of the tax is heterogeneous. For example, in the case of the soda tax in Berkeley, [Silver et al., 2017] found that the pass-through of the tax depends on the type of retailer. [Capacci et al., 2019], in the case of the soda tax in France, found that the pass-through rate depends on the type of beverage. In addition to price changes, tax policy can also induce changes in the characteristics of products, as has been shown in theoretical analyses [Réquillart et al., 2016]. In our model, firms’ reactions on quality impact both marginal cost and taste. To our knowledge, this paper is the first to develop a full structural econometric demand and supply model taking into account both price and quality strategies.